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Wednesday, 04 March 15
KEEP CALM AND INVEST IN DRY - THEODORE NTALAKOS
 Keep Calm and Carry On was originally a motivational poster, intended to raise the morale of the British public, produced by the British government in 1939 in preparation for the Second World War. In today's shipping environment where the daily headlines are in the likes of “excess vessel supply continues to weigh on the dry bulk market” and “slower growth in steel output and reduced coal demand contribute to a declining freight rate environment”, we also need all the motivation we can get. Companies’ revenues have declined and many operators are in the red, some are chopping charter rates, we hear about bankruptcies, restructurings and anyone can easily paint a very bleak outlook for the next couple of years.
According to the IMF, global growth in 2014 was 3.3% and in 2015 - 2016 it is projected to be 3.5 and 3.7 percent respectively. It is notable that the 2015-16 projections were revised downwards by 0.3% in October 2014, reflecting the reassessment of prospects in China, Russia, the euro area, and Japan, as well as weaker activity in some major oil exporters because of the sharp drop in oil prices. The United States is the only major economy for which growth projections have been raised.
In January 2014 the dry bulk fleet (over 20,000tons dwt) stood at 8,979 vessels or 697,63million tons deadweight. During 2014 the net growth (deliveries/additions minus demolitions/removals) was 5% in terms of deadweight (a closer proxy to the carrying capacity). Given the fact that there is high correlation between global growth and seaborne trade, unless the GDP growth is higher than the fleet growth, then simply put “the ships are always too many for the cargoes”. With the world growth at 3.3% in 2014 it is evident that the world fleet has been under-utilized and supply has exceeded demand.
In 2015 demolition levels and slippage/cancellations/conversions will be the key. Let’s look at some numbers. The current dry fleet is at 737.65 million tons deadweight while the dry orderbook for 2015 stands at 69million tons deadweight. Assuming that only 80% of this will be delivered (due to slippage, cancellations, conversions etc.) the increase will be 55.2mil tons deadweight. If demolition activity, which has kicked off the year encouragingly, ends up being similar to the levels of 2012, it will be a huge relief valve. In 2012 according to our data about 30million tons dwt was scrapped so if this repeats, the net growth of the fleet will be about 25million tons dwt or 3.4%. This is quite marginal against the projected global growth for 2015 but it may very well signal a balanced supply-demand outlook. So any upside on either the supply (more cancellations, more demolition) or the demand side (the boost to global demand from lower oil prices could be greater than is currently factored into the projections) can reverse the current situation.
The obvious question is if demolition activity can indeed reach 2012 levels. Well, the fleet of ships older than 25 years stands at 29.4mil tonnes i.e. a shade lower than the “required” volume that needs to be scrapped; another 40mil tonnes deadweight are the ships between 20-25 years. In the first two months of 2015, we have already seen much younger vessels sent for scrap. So the relief valve is there and needs to be kept open. Upcoming regulations that will require the shipowners to invest in upgrading their assets will also help in that direction since older assets will not be worth the investment.
So there you have it, there is a quite plausible scenario that can play out this year that can shift things towards the right direction and as long as a series of logical events occur, then we may be looking at a stronger and more balanced 2nd half of 2015. So, Keep Calm and Invest in Dry.
By Theodore Ntalakos
Newbuildings / SnP Broker
Compiled by:
Intermodal Research & Valuations
Analysts:
Ms. Eva Tzima
Disclaimer and legal disclosure: For any further queries please do not hesitate to contact our Research & Valuations Department. The information contained in this report has been obtained from various sources, as reported in the market. Intermodal Shipbrokers Co. believes such information to be factual and reliable without making guarantees regarding its accuracy or completeness. Whilst every care has been taken in the production of the above review, no liability can be accepted for any loss or damage incurred in any way whatsoever by any person who may seek to rely on the information and views contained in this material. This report is being produced for the internal use of the intended recipients only and no re-producing is allowed, without the prior written authorization of Intermodal Shipbrokers Co.
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Sunday, 05 April 15
FREIGHT RATES UNDER PRESSURE WEEK OVER WEEK
COALspot.com: The Indices fell on all segments and the market seemed to soften this week.
The BDI was almost lost 1.34% week over week and clo ...
Saturday, 04 April 15
BORYEONG POWER OF KOMIPO TO BUY TOTALED 695K MT OF HIGH AND LCV COAL
COALspot.com - Korea Midland Power Co. Ltd. (KOMIPO) is inviting bids from coal producers, marketing companies, or traders to supply of 500000 Metr ...
Friday, 03 April 15
U.S WEEKLY COAL PRODUCTION STAYS FLAT
COALspot.com – United States the second largest coal producer in the world has produced approximately totaled an estimated 18.3 million short ...
Friday, 03 April 15
TOBA BARA'S PANDU SJAHRIR ELECTED AS NEW CHAIRMAN OF THE INDONESIAN COAL MINING ASSOCIATION
COALspot.com: Pandu Sjahrir, the Vice President Director & CFO of the Jakarta-listed PT Toba Bara Sejahtra — a subsidiary of PT Toba Seja ...
Thursday, 02 April 15
GOVERNMENT MUST WORK WITH MINING, NOT AGAINST IT - PANDU SJAHRIR
The Coal Face: The coal price has hit its lowest point in recent memory
My father used to say to me that his children are his biggest inv ...
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- McConnell Dowell - Australia
- Indika Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Semirara Mining and Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Vizag Seaport Private Limited - India
- Global Green Power PLC Corporation, Philippines
- Latin American Coal - Colombia
- GN Power Mariveles Coal Plant, Philippines
- Georgia Ports Authority, United States
- Ministry of Finance - Indonesia
- Bhatia International Limited - India
- Leighton Contractors Pty Ltd - Australia
- Simpson Spence & Young - Indonesia
- Kaltim Prima Coal - Indonesia
- GMR Energy Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Mines - Canada
- Savvy Resources Ltd - HongKong
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement - Thailand
- Uttam Galva Steels Limited - India
- Parry Sugars Refinery, India
- Kartika Selabumi Mining - Indonesia
- PNOC Exploration Corporation - Philippines
- The Treasury - Australian Government
- Renaissance Capital - South Africa
- Bukit Baiduri Energy - Indonesia
- Wood Mackenzie - Singapore
- Thiess Contractors Indonesia
- South Luzon Thermal Energy Corporation
- Gujarat Sidhee Cement - India
- Pendopo Energi Batubara - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- OPG Power Generation Pvt Ltd - India
- London Commodity Brokers - England
- Sojitz Corporation - Japan
- Romanian Commodities Exchange
- Dalmia Cement Bharat India
- Global Business Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Banpu Public Company Limited - Thailand
- Intertek Mineral Services - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Xindia Steels Limited - India
- Lanco Infratech Ltd - India
- Kumho Petrochemical, South Korea
- SN Aboitiz Power Inc, Philippines
- Energy Link Ltd, New Zealand
- Indian Energy Exchange, India
- Kalimantan Lumbung Energi - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- Madhucon Powers Ltd - India
- Therma Luzon, Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Standard Chartered Bank - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Eastern Coal Council - USA
- Salva Resources Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Goldman Sachs - Singapore
- Bangladesh Power Developement Board
- Sakthi Sugars Limited - India
- Sinarmas Energy and Mining - Indonesia
- Agrawal Coal Company - India
- CNBM International Corporation - China
- Orica Mining Services - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Altura Mining Limited, Indonesia
- VISA Power Limited - India
- LBH Netherlands Bv - Netherlands
- Heidelberg Cement - Germany
- Marubeni Corporation - India
- Jindal Steel & Power Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Coalindo Energy - Indonesia
- Deloitte Consulting - India
- International Coal Ventures Pvt Ltd - India
- GVK Power & Infra Limited - India
- Borneo Indobara - Indonesia
- MS Steel International - UAE
- Neyveli Lignite Corporation Ltd, - India
- Bahari Cakrawala Sebuku - Indonesia
- Indian Oil Corporation Limited
- Riau Bara Harum - Indonesia
- Bulk Trading Sa - Switzerland
- Vedanta Resources Plc - India
- Orica Australia Pty. Ltd.
- Commonwealth Bank - Australia
- Sical Logistics Limited - India
- Globalindo Alam Lestari - Indonesia
- Indo Tambangraya Megah - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Asmin Koalindo Tuhup - Indonesia
- Ministry of Transport, Egypt
- Alfred C Toepfer International GmbH - Germany
- Offshore Bulk Terminal Pte Ltd, Singapore
- Price Waterhouse Coopers - Russia
- Essar Steel Hazira Ltd - India
- Singapore Mercantile Exchange
- Straits Asia Resources Limited - Singapore
- Directorate Of Revenue Intelligence - India
- Tata Chemicals Ltd - India
- SMC Global Power, Philippines
- Energy Development Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Bhushan Steel Limited - India
- The State Trading Corporation of India Ltd
- Ind-Barath Power Infra Limited - India
- Manunggal Multi Energi - Indonesia
- The University of Queensland
- Vijayanagar Sugar Pvt Ltd - India
- Cement Manufacturers Association - India
- Wilmar Investment Holdings
- Thai Mozambique Logistica
- Larsen & Toubro Limited - India
- Electricity Authority, New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- Sarangani Energy Corporation, Philippines
- Mercator Lines Limited - India
- Attock Cement Pakistan Limited
- India Bulls Power Limited - India
- Chamber of Mines of South Africa
- Formosa Plastics Group - Taiwan
- ASAPP Information Group - India
- Karaikal Port Pvt Ltd - India
- Australian Commodity Traders Exchange
- Samtan Co., Ltd - South Korea
- Ambuja Cements Ltd - India
- Africa Commodities Group - South Africa
- Aditya Birla Group - India
- Barasentosa Lestari - Indonesia
- Toyota Tsusho Corporation, Japan
- Malabar Cements Ltd - India
- Kobexindo Tractors - Indoneisa
- Bukit Makmur.PT - Indonesia
- Siam City Cement PLC, Thailand
- PTC India Limited - India
- Medco Energi Mining Internasional
- IEA Clean Coal Centre - UK
- Iligan Light & Power Inc, Philippines
- Meralco Power Generation, Philippines
- Maheswari Brothers Coal Limited - India
- Power Finance Corporation Ltd., India
- Billiton Holdings Pty Ltd - Australia
- Coal and Oil Company - UAE
- Eastern Energy - Thailand
- CIMB Investment Bank - Malaysia
- IHS Mccloskey Coal Group - USA
- PowerSource Philippines DevCo
- Mjunction Services Limited - India
- Kideco Jaya Agung - Indonesia
- Interocean Group of Companies - India
- Bharathi Cement Corporation - India
- Oldendorff Carriers - Singapore
- Makarim & Taira - Indonesia
- Tamil Nadu electricity Board
- Metalloyd Limited - United Kingdom
- Chettinad Cement Corporation Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Global Coal Blending Company Limited - Australia
- Electricity Generating Authority of Thailand
- Meenaskhi Energy Private Limited - India
- Central Java Power - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Anglo American - United Kingdom
- Jaiprakash Power Ventures ltd
- Indogreen Group - Indonesia
- Semirara Mining Corp, Philippines
- San Jose City I Power Corp, Philippines
- Sindya Power Generating Company Private Ltd
- PetroVietnam Power Coal Import and Supply Company
- Carbofer General Trading SA - India
- New Zealand Coal & Carbon
- SMG Consultants - Indonesia
- Bayan Resources Tbk. - Indonesia
- Rio Tinto Coal - Australia
- Planning Commission, India
- Star Paper Mills Limited - India
- ICICI Bank Limited - India
- Baramulti Group, Indonesia
- Merrill Lynch Commodities Europe
- Independent Power Producers Association of India
- Economic Council, Georgia
- Antam Resourcindo - Indonesia
- Australian Coal Association
- Edison Trading Spa - Italy
- Grasim Industreis Ltd - India
- Minerals Council of Australia
- TeaM Sual Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Posco Energy - South Korea
- Trasteel International SA, Italy
- Timah Investasi Mineral - Indoneisa
- European Bulk Services B.V. - Netherlands
- Bhoruka Overseas - Indonesia
- Videocon Industries ltd - India
- Indonesian Coal Mining Association
- Central Electricity Authority - India
- Coastal Gujarat Power Limited - India
- Mercuria Energy - Indonesia
- Parliament of New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- White Energy Company Limited
- Petron Corporation, Philippines
- Port Waratah Coal Services - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
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